Affymax Crashes on Omontys Recall, Hypersensitivity Data

By Jennifer BoggsManaging Editor

Though decried as an overreaction by analysts at the time, Affymax Inc.'s intraday share drop earlier this month on reports of mild allergic reactions in a pilot study of erythropoiesis-stimulating agent (ESA) Omontys (peginesatide) turned out to be an omen of bad news to come. (See BioWorld Today, Feb. 15, 2013.)

In an announcement released over the weekend, the Palo Alto, Calif.-based firm and partner Takeda Pharmaceutical Co. Ltd. said they were voluntarily withdrawing all lots of Omontys due to postmarketing reports of serious hypersensitivity reactions in a small number of patients.

Shares of Affymax (NASDAQ:AFFY) opened Monday, trading down 85 percent. With trading at 72 times the average volume, the stock closed Monday at $2.42, a loss of $14.10, or 85.4 percent on the day.

It's by far the lowest Affymax has traded since the firm went public via a $92 million initial public offering in 2006. And by the end of the day, the vultures were circling. New York law firm Bronstein, Gewirtz & Grossman LLC, for instance, said it was investigating potential claims on behalf of stockholders, focusing on whether the company and its execs violated federal securities laws. (See BioWorld Today, Dec. 18, 2006.)

Omontys is Affymax's primary growth driver, and the firm, which recorded $100 million on its balance sheet as of Sept. 30, has little else in the pipeline. Approved less than a year ago for use in adult dialysis patients with chronic kidney disease, Omontys had been hailed as the first ESA to hit the market since 2001, and analysts expected its less frequent dosing requirements to position it strongly against market-leader Epogen (epoetin alfa) from Amgen Inc. (See BioWorld Today, March 28, 2012.)

The drug recently had its J-code officially assigned by the Centers for Medicare & Medicaid Services and had just started picking up steam: Source Analytics Healthcare reported Omontys sales growing to $19.4 million for the month of January.

But now Affymax and Takeda, which have a 50-50 profit-sharing arrangement in the U.S., have suspended promotional efforts and informed physicians not to administer Omontys, pending an investigation to determine the root cause of the hypersensitivity reactions, including anaphylaxis, which resulted in the deaths of three patients.

The rate of overall hypersensitivity in postmarketing use of Omontys is 0.2 percent, with about a third of those cases being severe enough to require medical intervention or hospitalization. The fatal reactions comprise 0.02 percent of patients.

Reactions typically occur within 30 minutes of intravenous administration and appear to be a "first-dose phenomenon," CEO John Orwin said during a Monday morning conference call.

"If we can identify and address the underlying cause, the FDA has said they would work with us on the appropriate next steps for the product," he said, calling the hypersensitivity reports a "surprising and unfortunate turn of events."

The rate of overall hypersensitivity in the postmarketing setting has been 0.2 percent, which the company said was similar to what was observed in the pivotal Phase III EMERALD studies. But the postmarketing rate was "vastly different in terms of seriousness," noted Anne-Marie Duliege, chief medical officer.

Despite the small number of severe hypersensitivity cases, given that more than 25,000 patients have received Omontys since the drug's approval, the concerns were enough to warrant a recall, Orwin said. Citing an "abundance of caution," he added that Affymax and Takeda also pulled the subcutaneous version of the drug, which has not been linked to any of the hypersensitivity issues but has had more limited use.

Orwin said he could not yet speculate as to how long the investigation will take, but the recall effectively kills the momentum Omontys had been building. As Piper Jaffray analyst Ian Somaiya noted in a research report, "a safety setback of this magnitude early in the drug's launch could be challenging to recover from."

It's also not clear how the news might affect ongoing contract negotiations with dialysis firm Fresenius Medical Care North America. It was Fresenius halting the pilot study  and citing mild allergic reactions  that contributed to the stock volatility on Valentine's Day, settling somewhat after Affymax posted an 8-K filing.

Orwin declined to comment on ongoing negotiations, saying only that Fresenius was an "excellent" partner. The dialysis firm holds about a third of the dialysis market, and an exclusive deal would be a boon to Affymax.

Affymax and Osaka, Japan-based Takeda developed Omontys under a 2006 deal worth $535 million, with Takeda exclusively responsible for commercialization outside the U.S. Omontys was created using pegylation technology from Nektar Therapeutics Inc., which will lose out on a small royalty payment thanks to the recall.

As the firm benefitting from the Omontys troubles, Thousand Oaks, Calif.-based Amgen saw its shares (NASDAQ:AMGN) gain $2.73 to close Monday at $89.55.

Piper Jaffray's Somaiya said he estimates an incremental $300 million to $500 million per year in Epogen sales through 2016, and noted that the Omontys setback could keep other potential ESA competitors at bay.

"We believe the recall makes it less likely that dialysis centers and physicians will be inclined to try other ESA agents, regardless of potential cost savings," he wrote.

Reading Through to Biosimilars

If Somaiya's right, that could have large implications for the burgeoning biosimilar activity for ESAs.

Even with its safety issues, Epogen (marketed by Johnson & Johnson as Procrit outside the U.S.) racked up sales of $3.6 billion in 2011. And with its U.S. patent set to expire in 2015, it's a prime target for biosimilar development.

The newest BioWorld Data report, The Biosimilars Game: A Scorecard for Opportunities, Threats and Critical Strategies, lists a total of 42 epoetin alfa biosimilar products either approved or in development worldwide.

Though Omontys, a synthetic, dimeric peptide covalently linked to polyethylene glycol, is not a biosimilar  it completed all the required clinical testing for a traditional branded product  the fact that safety concerns did not emerge until after approval likely will make physicians even more wary of biosimilars, suggested ISI Group analyst Mark Schoenebaum. "Remember, that by 'piggy-backing' off of some of the innovator's data, some biosimilars might launch with less data than [Affymax] had generated."

Schoenebaum also pointed out, however, that sometimes no amount of clinical data can turn up every possible adverse event. And safety had been the primary focus of the Oncologic Drugs Advisory Committee's scrutiny in December 2011 prior to the panel's 15-1 favorable vote. (See BioWorld Today, Dec. 8, 2011.)

"This reminds us that very rare, but very bad adverse events often cannot be detected in clinical trials  only 'real world' use will generate enough exposure data to allow for detection," he said.

Plus, in some cases, it's not the drug itself that contributes to the safety issue; it's the packaging. In the late 1990s and early 2000s, there was a marked increase in the number of cases of pure red-cell aplasia (PRCA) linked to Eprex, a version of epoetin alfa. Investigation revealed a connection between PRCA and the uncoated rubber stoppers in the drug vials. Analysts wondered if a similar manufacturing issue could be responsible for the postmarketing reactions to Omontys. Affymax said the clinical program had been run using drug from single-dose units, while the postmarketing program had used multidose vials. But that's only one piece of the company's overall investigation, Orwin said.

"Clearly, among all the things we'll be investigating, we'll be looking very closely at drug products, in all its forms and at all stages of manufacturing, distribution, supply chain, handling at the sites," he said. "We'll look at every aspect of the product and the way it's been given."